Whether renting or buying, New Jerseyans are struggling to afford a place to live in the Garden State where nation-topping property taxes, rising rents, a competitive real estate market and increasing interest rates are battering affordability. After more than a decade of stalled construction, New Jersey — like the rest of the country — has a shortage of homes.

So how do candidates running for Congress in tight North Jersey races plan to make housing more affordable for their future constituents?

All those running for seats in the 5th, 7th and 11th districts — both the Democrats and Republicans — stressed the need to eliminate the cap on federal income tax deductions for state and local property taxes, known as the SALT deduction.

A provision included in former President Donald Trump’s 2017 tax overhaul placed a $10,000 limit on the amount in state and local taxes a filer could claim to reduce their federal income taxes. That cap led to steep federal income tax hikes for thousands of New Jersey homeowners, with tenants facing increased rents as landlords passed down the costs. Eliminating the cap could theoretically ease the cost of rents, the candidates say.

Republican challengers are blasting Democrats in office who voted for a massive climate change bill, the Inflation Reduction Act, even though the legislation didn’t eliminate the cap on SALT deductions, reneging on a previous “No SALT, No Deal” pledge. Democrats retort that Republicans pushed through the tax overhaul in the first place. The SALT cap is set to expire in 2025 if no action is taken.

Besides reviving the full SALT deduction, candidates touched on other ways to address the affordable housing crunch, including the elimination of capital gains taxes, pouring billions more into affordable housing assistance and production, and more.

District 5

Democrat Josh Gottheimer

In 2017, Rep. Josh Gottheimer first introduced the “Senior Housing Improvement and Retirement Accounts (IRA) Act,” which would allow seniors to avoid paying capital gains tax if they placed the profits from the sale of their home into a Roth IRA. It would apply to homeowners 55 and older who have owned their homes for 20 years or more, and offer a one-time exemption from the $7,000 contribution limit to a Roth IRA for those about to retire. The bill has never moved out of committee in Congress.

Gottheimer says the bill, if passed, would address a problem he hears from seniors across the 5th District who feel stuck in their homes but can’t downsize because they can’t afford the capital gains tax, which amounts to a fee paid on the profits of the sale. “Because they don’t move, we don’t actually create more housing stock for growing families,” Gottheimer said.

The IRS allows an exclusion from the tax up to $250,000 for an individual and $500,000 for a married couple. That still leaves a tax hit for families who bought homes decades ago, Gottheimer said.

For example, a retiree who bought a home for $150,000 in 1990 and sold it for $500,000 in 2020 would make a $350,000 profit. After the $250,000 exclusion, the senior would owe capital gains tax on the additional $100,000 he earned, which typically ranges from 15% to 20%, depending on his tax bracket.

“That tax hit can really set a retiree back,” Gottheimer said.

He also noted that New Jersey needs more housing supply and “sees a lot of opportunity in our old office parks that are not being utilized.”

That’s an idea state legislators are weighing in Trenton. One bill, A1294, would allow “stranded assets” such as certain office parks and retail centers to be rezoned into mixed-use developments, with 20% of new apartments reserved for low- to moderate-income housing.

“Take some of these office parks, create more mixed use out of them, put up condos or apartments, plus have some retail and flexible office space,” Gottheimer said.

New Jersey also has a lot of “mass transit deserts,” where commuters don’t have many options other than driving to get to their jobs, Gottheimer said. He wants to add more train stations throughout the state and build “more train towns,” or housing close to transit.

Republican Frank Pallotta

Pallotta spent his career at Goldman Sachs, Credit Suisse and Morgan Stanley, focusing on the U.S. residential housing market, working with government-sponsored enterprises like Fannie Mae and Freddie Mac and analyzing government housing programs.

He launched a startup called Loan Value Group in the midst of the subprime mortgage crisis that offered a program called the “Responsible Homeowner Reward,” which paid cash incentives to borrowers who stayed current on their mortgages. The goal was to prevent strategic default, when borrowers choose to stop making payments on mortgages that are often underwater, or the market value of the home is below the amount due on the mortgage.

“Not only was that the highlight of my professional career, it's the reason I got into politics,” Pallotta said. “You throw the public and private sector together in a room with a real crisis, we can come up with solutions if you don't simply think about the investor bottom line, but the greater good.”

Pallotta said New Jersey's first priority is more rental assistance, followed by programs such as tax incentives with housing allowances to bring businesses back into the district. "If we don't have a robust enough economy, then everything else collapses from there,” Pallotta said.

In 2021, the state Legislature passed a $14.5 billion tax break package that included programs incentivizing businesses to locate in New Jersey and create jobs, and credits for real estate projects focused on urban areas, affordable housing and development around public transportation. A NorthJersey.com report found that these tax breaks have gone virtually unused in the two years since the package was approved.

Pallotta mentioned the rise in corporate investors and investment banks buying up rental housing. An investigation by the Asbury Park Press found that the number of limited liability companies owning single- to four-family homes shot up from 12,000 in 2012 to more than 72,000 statewide last year.

He said institutions that receive loans from the Federal Reserve have an “obligation to more than just your shareholders” and “there’s a lot of people suffering in this country … and it’s incumbent upon every elected official to make sure that Americans [have] shelter.” He didn’t provide an example of how Congress should intervene in such investments backed by government loans, but said he wanted to take a look at homes owned by banks that don't sell in foreclosure actions.

Pallotta also touched on the Mount Laurel doctrine, under which New Jersey municipalities negotiate a plan to zone and create their “fair share” of affordable housing in court to protect the towns from builder's remedy lawsuits, a state and local issue.

“I think developers are the biggest beneficiary of these affordable housing mandates. … I would want to get a hard look at how we could change the execution strategy,” Pallotta said. “I think first responders and veterans should be the beneficiary of affordable housing. It shouldn't just be about affordability, it should be about making sure that your town retains people who want to contribute to the town and help the town.”

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District 7

Democrat Tom Malinowski

Malinowski said he was disappointed Congress was not able to pass the Build Back Better bill, something he “would absolutely vote for again.” President Joe Biden signed into law a scaled-back version of the legislation, called the Inflation Reduction Act, which targeted climate change, health care and tax provisions.

The previous version the House passed in November 2021 included more than $170 billion worth of housing assistance that lawmakers cut in the final legislation, including $24 billion for 300,000 new housing vouchers that would pay for a portion of a low-income family’s rent. It also included $65 billion to renovate public housing buildings, $15 billion toward the national Housing Trust Fund, and $12 billion for the Low Income Housing Tax Credit, which subsidizes developers to build apartments for low-income families, as well as other programs.

Malinowski said he hears from his constituents, particularly in rural towns, who “chafe” at requirements to build affordable housing and added that they don’t have the infrastructure and services to support growth. He said he “feels the pain and concerns of communities who worry they don’t have public transportation to support a greater population” but also accepts that “it’s an important goal and a worthy goal to have low-income housing evenly distributed.”

“We have enormous local controversies with regard to where we put the low-income housing in our state,” Malinowski said. “In a way I'm blessed not to be in the middle of that, because it's not a federal issue, it's a state-versus-municipality conflict. I'm not in a sort of front-line position to be able to resolve those problems, apart from trying to be able to deliver federal assistance, and we haven't done as much as we should.”

Malinowski also said he’s asked his team to look into how to reduce delays in distributing hurricane relief aid.

More than a year after the remnants of Hurricane Ida struck New Jersey and killed more than 30 residents, New Jersey has not set up a program to spend $228 million worth of Community Development Block Grant funds meant to help flood survivors. The state does not expect to pass out this assistance until 2023.

“I understand, given the huge crush of responsibility that FEMA has right now with all these events around the country and the need to ensure that there isn't waste and fraud, that there are going to be some hoops that homeowners and businesses have to jump through, and that's sometimes going to be frustrating,” Malinowski said. “But the federal government should not be taking months to deliver a check to the state government, and the state should have a system in place to distribute it much more rapidly. That's the piece we can work on to fix.”

Republican Tom Kean Jr.

Kean’s answer to making housing more affordable was to “create new jobs and economic opportunities so that small businesses can continue to thrive.” He added that rent has gone up in part because the U.S. is “not energy independent.”

“I talked to a person in Rahway whose home expenses have gone up $800 a month, his energy costs are going up,” Kean said. “If you start to lower your overall base costs, rent goes down.”

When asked what role he sees federal assistance playing, such as vouchers, public housing or tax credits for developers, Kean said, “I’m happy to look at those. I know there are many Section 8 housing within the district.”

District 11

Democrat Mikie Sherrill

Pushing federal money into towns “struggling to meet their Fair Share housing requirements” — or the number of affordable housing units a town negotiates in court to build or plan for — will help towns defray costs that come with more housing, such as extra transportation and schools, Sherrill said.

For instance, she said, she’s pushing to fund community projects in her district. The 10 projects for which she has secured funding include $3 million for Morris Habitat for Humanity to help build 25 condominiums for low-income families at the former E.A. Porter industrial site in Randolph.

“I chose that as one of my community projects because affordable housing has been so difficult to find for people throughout the region,” Sherrill said.

Republican Paul DeGroot

Sherrill’s opponent, former Passaic County Prosecutor Paul DeGroot, said eliminating the cap on the SALT deduction would be his first priority, and that he would “look into whether the federal government can assist to take the burden off New Jersey.”

“I would look at rebates. I would look at deductions,” DeGroot said. “I'm not here to say, ‘Not in my backyard.’ I'm just here to get what's the best answer.”

“It is an expensive state to live in, as a tenant back in my youth, as a homeowner, then a landlord. I've been them all. And there's definitely that quality-of-life [question]: How do I get my kids to go to a good school if I can't move to a good area? How do I afford this house on this rent?”

DeGroot said he remembered living in “some pretty terrible apartments” when he was younger, including one that had mushrooms growing out of the floor. “That’s how damp it was,” he said.

This article originally appeared on NorthJersey.com: How will NJ congressional candidates tackle affordable housing